Charlie Munger early life

Much is written about Warren Buffett but less on his long time business partner Charlie Munger.

Here is an interesting post on Munger:

http://www.joshuakennon.com/if-charlie-munger-didnt-quit-when-he-was-divorced-broke-and-burying-his-9-year-old-son-you-have-no-excuse/

Great article from Base Hit Investing

A great blog post by Base Hit Investing.

Explains the relationships between key points such as: having a great business with reinvestment opportunity, 'cheap' valuation, time horizon.

Link here:

http://basehitinvesting.com/importance-of-roic-part-1-compounders-and-cheap-stocks/?utm_source=rss&utm_medium=rss&utm_campaign=importance-of-roic-part-1-compounders-and-cheap-stocks

Value thoughts from Lauren Templeton, Jesse Livermore, Wilbur Ross

Some good quotes' from Lauren Templeton Capital Management March 2014 letter to shareholders. Lauren Templeton is John Templeton's granddaughter who also manages funds.

The letter paraphase Jesse Livermore:

"Before we begin however, we are reminded of a quote from the famed trader of the 1920s and 1930s, Jesse Livermore (paraphrasing from his book How to Trade in Stocks) to provide context.

Over a long period of years I have rarely attended a dinner party including strangers that someone did not sit down beside me and after the usual pleasantries inquire:

"How can I make some money in the market?"

It is difficult to exercise patience with such people. In the first place, the inquiry is not a compliment to the man who has made a scientific study of investment and speculation. It would be as fair for the layman to ask an attorney or a surgeon:

"How can I make some quick money in law or surgery?"

Futher in the letter there are quotes from Wilbur Ross:

In Mr. Ross’s words, “Implementation is the sine qua non” and that he would rather back a “mediocre idea that is brilliantly executed versus a brilliant idea with mediocre execution.” Wilbur Ross stressed that in turnaround scenarios it is better in his experience to pay slightly more and not be too early, citing that the additional data points are valuable. In sum, he mentioned that he maintains two plaques in his office, with one stating, “Duration is the Natural Enemy of Return” and the second that “Time Equals Risk.” 

 

Old article about notable value investors

Interesting article about some famous investors when they were younger: Michael Price, Seth Klarman, Jim Chanos

http://money.cnn.com/magazines/fortune/fortune_archive/1989/10/30/72667/

Amazon on 60 Minutes

An interesting look at the various divisions of Amazon, Jeff Bezos, and flying drones:

http://youtu.be/gcXoj_UBXv8

Many are divided over the valuation of Amazon. Amazon bulls commonly add back part of the expenses from CAPEX to get an adjusted earnings.

 

Jeff Matthews on Carl Icahn & Ebay

Wow, nice post here about the recent headlines generated by Carl Icahn over EBay & Paypal

http://jeffmatthewsisnotmakingthisup.blogspot.com.au/2014/03/ebays-got-guy-who-helped-pioneer-world.html?m=1

Taleb & Warren Buffett

Being a fan of both Nassim Taleb and Warren Buffett I was pleasantly surprised when watching this interview.

I know Taleb has commented before that George Soros is a better investor than Warren Buffett. In my mind I thought the exact same thing mentioned by Jeff Matthews.

Link to video here:

http://youtu.be/PQsnrzSW6rA

By the way, Jeff Matthews has a good blog also:

http://jeffmatthewsisnotmakingthisup.blogspot.com.au/?m=1

Robert Schiller says don't write off Italy

Nice interview of Robert Schiller. 

In the last few minutes he talks about how he bet on an improvement in Italy for his personal portfolio: 

http://youtu.be/ABvtKGrIDUs

David Winters of Wintergreen Advisers: 2014 March

David Winters discusses opportunities around the world.

http://youtu.be/x6I1B3MaTms

Monaco documentary by Piers Morgan

Interesting, light hearted short documentary hosted by Piers Morgan about Monaco:

http://youtu.be/htA0mqYrCTE

P&C insurance combined ratio and ROE

An interesting graph showing relationship between P&C insurance combined ratio and their return on equity.

Think how this affects insurance company investment returns at: Berkshire, Markel, QBE 

What are their mix of investments: bonds vs equities?

Thoughts on 'Baby Berkshire'

Been watching this company for a little whole now. Good blog article here:

http://brooklyninvestor.blogspot.com.au/2014/03/markel-2013-annual-report.html?m=1

K2 - Content is king

Good read about content producers such as Fox and Disney

http://k2am.com/docs/content-is-king.pdf?utm_source=Trending+on+Livewire+%22The+Morning+Wire%22&utm_campaign=8679d72171-The_Morning_Wire_Test_15_07_2013&utm_medium=email&utm_term=0_1911ffeed5-8679d72171-71374805

Why large caps at this time?

Donald Yacktman explains why large large caps in this market looking like better opportunities vs smaller caps:

http://youtu.be/n3SmoR6YHFQ

Security analysis notes

SIGNIFICANCE OF THE EARNINGS RECORD

…It must be remembered that the automatic or normal economic forces militate against the indefinite continuance of a given trend…

…diminishing returns, etc., are powerful foes to unlimited expansion, and in smaller degree opposite elements may operate to check a continued decline. Hence instead of taking the maintenance of a favorable trend for granted—as the stock market is wont to do—the analyst must approach the matter with caution, seeking to determine the causes of the superior showing and to weigh the specific elements of strength in the company’s position against the general obstacles in the way of continued growth.

In particular here was an interesting line by Graham & Dodd about PE Ratio:

...As we shall point out in the next chapter, this assumed earning power may properly be capitalized more liberally when the prospects appear excellent than in the ordinary case, but we shall also suggest that the maximum multiplier be held to a conservative figure (say, 20, under the conditions of 1940) if the valuation reached is to be kept within strictly investment limits. On this basis, assuming that general business conditions in the current year are not unusually good, the earning power of Company A might be taken at $7 per share, and its investment value might be set as high as[…]

Goverment bonds defaults

For those looking at getting higher returns from foreign government bonds, here are some wise words from Benjamin Graham below. Graham talks about the reliability of private bonds vs government bonds in Intelligent Investor.

“Bonds of Foreign Corporations. In theory, bonds of a corporation, however prosperous, cannot enjoy better security than the obligations of the country in which the corporation is located. The government, through its taxing power, has an unlimited prior claim upon the assets and earnings of the business; in other words, it can take the property away from the private bondholder and utilize it to discharge the national debt. But in actuality, distinct limits are imposed by political expediency upon the exercise of the taxing power. Accordingly we find instances of corporations meeting their dollar obligations even when their government is in default.”
Excerpt From: Graham, Benjamin. “Security Analysis.” McGraw-Hill, 2009. 

List of sovereign debt defaults:

http://en.wikipedia.org/wiki/List_of_sovereign_debt_crises

More Intelligent Investor quotes:

“I. Safety is measured not by specific lien or other contractual rights, but by the ability of the issuer to meet all of its obligations.3

II. This ability should be measured under conditions of depression rather than prosperity.

III. Deficient safety cannot be compensated for by an abnormally high coupon rate.

IV. The selection of all bonds for investment should be subject to rules of exclusion and to specific quantitative tests corresponding to those prescribed by statute to govern investments of savings banks.”

Excerpt From: Graham, Benjamin. “Security Analysis.” McGraw-Hill, 2009. 

Historical look at US interest rates

 Historical look at US interest rates

For those interested at a look at historical interest rates and where we may go from here?

http://www.ritholtz.com/blog/wp-content/uploads/2013/12/Screen-shot-2013-12-22-at-9.50.39-AM.png

Why look at interest rates for future guidance on the stock market? An interesting point made by Buffett in 1999:

"look at one of the two important variables that affect investment results: interest rates. These act on financial valuations the way gravity acts on matter: The higher the rate, the greater the downward pull. That's because the rates of return that investors need from any kind of investment are directly tied to the risk-free rate that they can earn from government securities. So if the government rate rises, the prices of all other investments must adjust downward, to a level that brings their expected rates of return into line. Conversely, if government interest rates fall, the move pushes the prices of all other investments upward. The basic proposition is this: What an investor should pay today for a dollar to be received tomorrow can only be determined by first looking at the risk-free interest rate.

Consequently, every time the risk-free rate moves by one basis point--by 0.01%--the value of every investment in the country changes. People can see this easily in the case of bonds, whose value is normally affected only by interest rates. In the case of equities or real estate or farms or whatever, other very important variables are almost always at work, and that means the effect of interest rate changes is usually obscured. Nonetheless, the effect--like the invisible pull of gravity--is constantly there."

'To Catch A Trader' - Insider trading documentary on SAC Capital

'To Catch A Trader' - Insider trading documentary on SAC Capital 

Just watched a free documentary on PBS about SAC Capital and insider trading

Interesting view on Steve Cohen's track record: http://en.wikipedia.org/wiki/Steven_A._Cohen


Some interesting parts:
- a trader Turney Duff talks about gathering information from his network of sources
- was the first time I had heard about the use of 'expert network firms'
- Fairfax Financial vs SAC Capital and Jim Chanos's Kynikos and alleging collusion with research analysts to drive down FFH stock


Here is the link to the documentary online:
http://www.pbs.org/wgbh/pages/frontline/to-catch-a-trader/





Thanks to CS Investing for their great blog and pointing out this documentary.

Teledyne and Dr Henry Singleton

Been a while since the last post and will keep this one short.

Just finished a case study of Teledyne founder and supreme capital allocator Dr Henry Singleton.

For those interested in learning about who Warren Buffett believed to have amongst the best operating and capital deployment record in American business history I would highly recommend downloading the case study here:

http://csinvesting.org/2011/09/20/henry-singleton-and-teledyne-a-study-in-excellent-capital-allocation/

or here:

http://www.scribd.com/doc/65650082/Teledyne-and-Henry-Singleton-a-CS-of-a-Great-Capital-Allocator


Thanks to the CS Investing blog and  John Chew for the great work in putting this together.